With respect to the order requested under Section 13 (b) of the Act, in view of the special and unusual circumstances, the Commission concludes that insofar as such section may be applicable, Dresser is entitled to an exemption and consequently need not be approved as a subsidiary service company. Such a finding is conditional, however, upon Dresser complying with Rule U-13-31 (a) or any other applicable rule to insure that any service or construction performed in connection with the proposed plan be done at actual cost. The exemption herein granted shall pertain to performance of services and construction and the sale of goods referred to in the record, it being the finding of this Commission that Dresser shall not now or at any future time perform any other services or construction for or sell any other goods to Public Service without compliance with Rule U-13-22.

CONDITIONS AND RESERVATIONS

Our order approving the applications will be subject to the following terms and conditions which are severally imposed insofar as they may be applicable to the applicants.

(1) That the steps involved in the various applications shall be carried out and effected respectively as set forth in and for the purposes represented by such applications as amended.

(2) That if the express authorization of the issue and sale of the securities by the Public Service Commission of Indiana shall be revoked or otherwise terminated, the exemption granted with respect to such issue and sale shall be immediately terminated without further order by this Commission.

(3) That within 10 days after the issue and sale of such securities and within 10 days after each of the transfers of assets involved in these transactions, the applicants shall file with this Commission a

*Section 13 (b) provides:

After April 1, 1936, it shall be unlawful for any subsidiary company of any registered bolding company or for any mutual service company, by use of the mails or any means or instrumentality of interstate commerce, or otherwise, to enter into or take any step in the performance of any service, sales, or construction contract by which such company undertakes to perform services or construction work for, or sell goods to, any associate company thereof except in accordance with such terms and conditions and subject to such limitations and prohibitions as the Commission by rules and regulations or order shall prescribe as necessary or appropriate in the public interest or for the protection of investors or consumers and to insure that such contracts are performed economically and efficiently for the benefit of such associate companies at cost, fairly and equitably allocated among such companies. This provision shall not apply to such transactions as the Commission by rules and regulations or order may conditionally or unconditionally exempt as being necessary or appropriate in the public interest or for the protection of investors or consumers if such transactions (1) are with any associate company which does not derive, directly or indirectly, any material part of its income from sources within the United States and which is not a public utility company operating within the United States, or (2) involve special or unusual circumstances or are not in the ordinary course of business.

certificate of notification showing that the issue and sale of such securities and the transfer of such assets have been effected as set forth in and for the purpose represented by the application as amended and in accordance with the terms of this order.

(4) That Dresser shall comply with Rule U-13-31 (a) and any other applicable rules of this Commission now in force or becoming effective prior to the conclusion of the above transactions to insure the service and construction performed and goods sold be so performed and sold at actual cost and that the exemption herein granted shall not be deemed to extend further than the performance of the service and the construction and the sale of goods as particularly set forth in the record herein.

(5) That the Commission reserves jurisdiction over the payment of any fees or commissions in connection with the placing of the bonds*.

An appropriate order will issue.

By the Commission: Commissioner Mathews concurring in the result.

*EDITOR'S NOTE: On April 6, 1940, the Commission ordered that the condition in paragraph numbered "(5)" is no longer in effect.

6 S. E. C.

[No. 892]

IN THE MATTER OF

EBASCO SERVICES INCORPORATED

File No. 47-36. Promulgated October 19, 1939

ACQUISITION OF UTILITY ASSETS AND OTHER INTERESTS IN ANY BUSINESS BY REGISTERED HOLDING COMPANY OR SUBSIDIARY.

Application filed by a subsidiary of a registered holding company, pursuant to Section 10 (a) (3) of the Act, for approval of the acquisition by it of the entire business, property and assets of its wholly owned subsidiary, which will be dissolved following the acquisition, approved, subject to certain conditions, the Commission finding that the proposed acquisition will not tend toward interlocking relations or the concentration of control of public utility companies of a kind or to an extent detrimental to the public interest or the interest of investors or consumers, because neither is a public utility company, nor has securities in the hands of the public, nor will the proposed acquisition complicate the capital structure of the holding company system.

APPEARANCES:

Ralph C. Binford and John W. Houser, of the Public Utilities Division of the Commission.

Reid & Priest, by R. A. Henderson and Harry A. Poth, Jr., for Ebasco Services Incorporated.

FINDINGS AND OPINION OF THE COMMISSION

Ebasco Services Incorporated (hereinafter sometimes referred to as "Ebasco”), a New York corporation and a wholly owned subsidiary of Electric Bond and Share Company, a registered holding company, has filed an application pursuant to Section 10 (a) (3) of the Act for approval of the acquisition of the entire business, property, and assets of its wholly owned subsidiary, Phoenix Engineering Corporation (hereinafter sometimes referred to as "Phoenix").

A public hearing was held upon said application, after appropriate notice. The Commission has examined the record in this matter and now makes the following findings:

1 For the purpose of hearing, there were consolidated certain other applications and a declaration filed by Ebasco Services Incorporated and by Ebasco International Corporation, a wholly owned subsidiary of Ebasco. As is stated below we shall reserve jurisdiction over these other filings.

THE FACTUAL BACKGROUND

Prior to November 1935, Electric Bond and Share Company rendered engineering, financial, accounting, and other services to the operating companies in the Electric Bond and Share system. In November 1955, Electric Bond and Share Company caused Ebasco to be incorporated and transferred to it the assets it had utilized in performing services for operating companies.

Ebasco was incorporated with an authorized capital of $2.600,000, this being divided into 26,000 shares of capital stock with a par value of $100 each. All of the authorized capital stock of Ebasco was subscribed for and issued to Electric Bond and Share Company, which has continued to be the sole owner thereof. Since November 1955. Ebasco has continued furnishing services of the nature above indicated to the operating companies of the Electric Bond and Share system including the companies, directly and indirectly, subsidiary to American & Foreign Power Company Inc., an associate company, which subsidiaries are all located and do business only outside of the United States. Among the assets transferred by Electric Bond and Share Company to Ebasco was all of the capital stock of Phoenix Engineering Corporation. This corporation had been, in effect, the engineering division of the service department of Electric Bond and Share Company, and has been regarded, since the transfer of such service functions to Ebasco, as the engineering division of that organization. While Phoenix was, and is, primarily a service organization, yet, in Chile, engineering construction services to client companies have been, and are now rendered, through its wholly owned subsidiary, the Compania Constructora del Pacifico. A wholly owned subsidiary of Ebasco, Emprezas Electricas Brasileiras, S. A., renders services to client companies operating in Brazil.

THE PROPOSED TRANSACTION

Ebasco proposes to acquire all the assets of its wholly owned subsidiary, Phoenix Engineering Corporation, assuming all of the obligations of the engineering corporation, liquidating and dissolving that corporation and, as the sole stockholder thereof, receiving title to the assets through such liquidation. For approval of this acqui

• Effective January 1, 1938, the organization of Ebasco was segregated into two divisions: United States division and the international division. The international division now renders services to the companies of the system operating without the United States while the United States division limits its activities to rendering services to the companies of the system operating within the United States.

Following the merger of Phoenix into Ebasco, Compania Constructora del Pacifico and Emprezas Electricas Brasileiras, S. A., will, for bookkeeping purposes, be treated as though they were subsidiaries of the international division.

It is proposed that the special engineering services, including construction services, heretofore rendered by Phoenix, will be rendered to client companies operating in foreign countries by the international division of Ebasco. In turn, that division will request the United States division of Ebasco to perform these services for it. The United States division will charge the international division for such services at cost.

sition, it has filed an application and an amendment thereto pursuant to Section 10 (a) (3) of the Act.

FINANCIAL ASPECTS OF THE PROPOSED TRANSACTION

The only capital stock of Phoenix issued and outstanding, as at April 30, 1939, was 1,850 shares of no par common stock with a carrying value of $185,000. As at the same date its current liabilities were $45,573.58, its current assets were $407,790.76 and its investment in equipment was $20,150.80 against which there was a reserve for depreciation in the amount of $6,696.83. Its investment in associate companies was $3,100.

Phoenix was

For the 12 months ended April 30, 1939, the total income of $680,776.49, of which, it is stated $548,462.75 represented recovery of expenses for services rendered at cost to domestic utility operating companies, $9,893.11 represented compensation for the use of capital in such domestic servicing and the remainder, $122,420.63, represented income for services rendered at other than cost, i. e., to foreign utility companies. After the deduction of expenses, including allocations to reserves, of $624,438.70, the net income of Phoenix for this period was $56,337.79.

As has been stated Ebasco will acquire the assets and assume the liabilities of Phoenix. The balance sheet of Ebasco as at April 30, 1939, both before and after giving effect to the acquisition of the assets of Phoenix, is summarized below: